OFDC says low number of digital tax credit applications isn’t unexpected

The Ontario Film Development Corporation (OFDC) says the number of companies applying for its Interactive Digital Media Tax Credit has numbered in the "single digits" since launching three months ago. The number is low, but coordinator Raina Feldman Wells says it’s in line with her expectations, and that she’s unfazed by the slow start to the program. One reason she cites for the slow response is that several companies that would qualify for the tax credit are waiting for their fiscal year-end before applying. Feldman Wells says a number of companies have approached her group asking for more information about how the credit works, and that the OFDC will continue to educate the community through conference appearances and other venues. The credit was launched in May with fanfare by the OFDC, but reaction to it was mixed (CNM, July 12/00). Some industry players have said the lackluster response isn’t surprising given the restrictive nature of its eligibility requirements. Maxim Engel, an independent producer, has argued for months that the credit would have a negligible effect on the industry. Still, he’s surprised at the numbers. "I didn’t think there would be very many (applications)," he told Canadian NEW MEDIA, "but I didn’t think there would be that few." The problem, as Engel sees it, is that the credit only applies to small businesses that assume most of the full financial risk for original projects. When projects become too large, or backers take more than a 10 per cent stake in the profits, companies can no longer apply for the 20 per cent break on labour costs. Overall, the credit was expected to cost the government between $10 million and $15 million to implement, but Engel doesn’t think Finance Minister Ernie Eves needs to worry. "I’ve got a feeling it would be a miracle if they get there," he says. Learning curve expected However, Feldman Wells cautions against rating the program a success or failure just yet. "It’s a little early to make an assessment of that. I’m not completely surprised by those levels. I think there is always a bit of a learning curve with every tax credit that we launch, where it takes people some time to get up to speed – particularly because it’s a different industry, in some ways, from people who have applied for tax credits before. They’re just not sure how it works." Feldman Wells also isn’t closing the books on potential changes to the credit in the future. For the moment, she is listening to feedback on the program, saying any decision to change the credit’s structure would fall to the Ministry of Finance.

OFDC says low number of digital tax credit applications isn’t unexpected

Broadcast | September 20, 2000

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